Changing Britain's Welfare State

The government unveiled today long-awaited proposals for changing Britain's massive welfare program that officials hailed as a "modern system to take us into the next century" and that opposition spokesmen said marked a "black day" that would lead to the destruction of the postwar welfare state.

Some of the proposals would abolish or limit some payments for which all citizens are automatically eligible regardless of income. Others would impose new income and need requirements.

They extend from the transfer to the private sector of a government-run supplementary pension plan to which 11 million Britons belong, to new limits on the current "death grant" of up to $40, for which everyone is eligible, to cover funeral costs.

The proposals, under secret study by the government for 18 months, are the economic centerpiece of Conservative Prime Minister Margaret Thatcher's second term. They represent a considerable political risk for an incumbent under whom unemployment has nearly tripled and low inflation targets have proved elusive.

But Thatcher has argued that the current system, which at a cost of nearly $51 billion a year consumes more than one-third of all government spending, has become too expensive, too complex and counterproductive to economic growth.

At the same time, government spokesmen have said that the sheer number of the various welfare payment programs, and the lack of criteria based upon need, mean that many are encouraged not to work and that the truly needy do not get enough assistance.

Many of the proposals, which have been the subject of extensive speculation for weeks, are likely to be unpopular, not only with the poor but also with the middle class, which receives some automatic benefits. But the government maintains that Britons overall will be pleased with a system that is simpler, cheaper and, it contends, fairer.

The proposals do not affect the National Health Service, under which every citizen is eligible for free medical care.

Social Services Minister Norman Fowler declined under heavy opposition questioning in the House of Commons today to say how much the government proposed to save with the new plan.

But estimated savings under the program unveiled today are not expected to exceed an initial $1.3 billion. Officials maintain the reforms are an investment for future generations when the real savings will come.

Opposition leaders and private social services agencies were quick to attack the proposals.

Michael Meacher, the opposition Labor Party's social services spokesman, said they paved the way for "the erosion of the fundamental system of the welfare state for all citizens, and the reintroduction for the first time this century of Victorian values in making invidious distinctions between the deserving poor and the undeserving poor."

"The main beneficiaries will be the rich who will receive even bigger handouts in future Tory budgets . . . . This government has trebled unemployment, and with these cuts it is now gratuitously twisting the knife in its victim," he said.

The British welfare system was established in 1942 under a studycompiled by Sir William Beveridge that has become a sort of bible of welfare rights. Its basic premise was that an affluent society ought to be able to supply all of its citizens with a certain standard of living and certain payments regardless of income.

The Beveridge proposals were implemented in 1948 and have been added to many times. A number of the provisions of the current welfare system seem strange to outsiders, particularly those from the United States, including such payments as the $8.84 child benefit that every British mother automatically receives per child each week. The child benefit was not affected by today's proposals.

Others payments are more substantial both in real terms and in the difference that they make to the daily lives of low-income and unemployed citizens. Changes in these programs, with more emphasis on gauging the resources and income of the recipients, brought the most reaction today.

They include reductions in automatic supplementary payments such as those covering water, heat, property tax and mortgage interest.

The proposal likely to cause the most controversy, however, is the abolition of the State Earnings Related Pension Scheme, called SERPS. Implemented in 1975 by the Labor government, SERPS is a supplementary pension administered by the government to which employes and employers contribute based on wage levels.

Benefits are paid over and above the basic national pension plan from which all citizens benefit, and are designed to provide supplementary retirement payments for those workers whose employers did not offer a private plan. The terms of the government plan are considered more favorable for many workers, since there is no vesting penalty for interrupted employment due to changed jobs, layoffs or time taken for child-rearing, usually by occasionally employed mothers.

Fowler said today that due to decreased numbers of workers and increased numbers of retirees in upcoming decades, the cost of the program soon would become prohibitive. He said the new plan will not affect those due for retirement in the next 15 years, and will allot special payments for younger members who already have made significant payments into the program.

The new proposals will be debated until September in Parliament, where the government holds a strong majority. They are scheduled for full implementation by 1987.

Karen DeYoungKaren DeYoung is associate editor and senior national security correspondent for The Post. In more than three decades at the paper, she has served as bureau chief in Latin America and in London and as correspondent covering the White House, U.S. foreign policy and the intelligence community. Follow